CHENNAI: Tamil Nadu Director General of Audit (DGA), who oversees audit department in the state, has instructed auditors of the milk cooperative, HR&CE, local fund audit department and others not to conduct physical verification while assessing stocks at the end of the financial year. Instead, the audit department has been told to use stock details from the departments concerned for annual auditing. The revised methodology will come into effect from March 31 and a directive to this effect was recently issued to the respective audit directorates.
D Jaisankar, DGA, told TNIE that physical verification of stocks is beyond the scope of audit functions. “The audit department also lacks the wherewithal to carry out such a huge exercise. The maintenance of stock data is a responsibility of respective department administrations, not of auditors,” he said.
‘Bid to help hide maladministration’
He claimed the decision to eliminate physical verification of stocks aligns with practices followed by the Comptroller and Auditor General of India (CAG). He stressed that auditors should not engage in administrative roles, which would be both ineffective and pose unnecessary interference in departmental administration. “We have rectified the incorrect practice that had been in place for years,” he said.
A section of activists in the dairy industry, however, have alleged that the move is an attempt to help Aavin and other departments conceal maladministration. Some auditors from the milk cooperative department too have said this decision lacks legislative backing and is aimed at preventing the mismanagement of dairy stocks, such as butter, milk powder, and ice cream, at dairy plants from becoming public knowledge.
“During annual stock verification on March 31, auditors have previously highlighted several irregularities. Now, auditors will have to rely only on the data provided by the departments,” said an audit inspector on the condition of anonymity. Although physical verification was previously conducted for selected samples, it served as a wake-up call for the administration to address management gaps at all levels, he added.
“Exempting physical verification of stocks from audit department roles requires amendments in accordance with the TN Cooperative Act, rules, and bylaws. The directive indeed raises huge suspicion over the alleged mismanagement in dairy development and Aavin over the last few years,” said a retired Aavin employee.
However, official sources from Aavin said the department, in light of the DGA directive, has taken steps to hire internal auditors for stock verification and financial assessment.
“Tenders have been issued to appoint internal auditors for a few dairy plants. We will submit our records to the audit department,” a senior official from Aavin said.
The audit functions of departments like milk cooperative, HR&CE and local fund audit were headed by the respective department’s head until a few years ago. In 2020, the audit operations were transferred to the finance department to improve audit efficiency and transparency in administration.